Will anyone admit that bitcoin is looking like a sophisticated ponzi scheme?

[ChuckBuck]

Can't be a Ponzi scheme without a Madoff!

Dorian can't even afford lunch!

[trust]

Anyone giving your ponzi coins to me ?
I take em all.

[mintodev]

Can't be a Ponzi scheme without a Madoff!

Dorian can't even afford lunch!

http://s.quickmeme.com/img/12/120ac708a3289c04c93494fb00acc1ec7047b99f1935496f74d5f28d1ce01c60.jpg

Lol this old man.

[solomon]

I've posted this before but ill post it here.

Ponzi scheme - A central actor (person or 'company') receives money with a promise of quick and significant returns. All people that buy into the scheme interact directly with the central actor who pays out money he has received from 'investors' as returns in order to drum up more investment in a fictitious investment opportunity. It is by design centralized, non-transparent and has a hierarchy of 2 levels - CEO of ponzi and everyone else. The investors do not realize they are being payed out with their own and others principle investments.

    O      O       O
     \      |      /
O - (CEO of ponzi) - O
    /       |      \
 O         O        O


Pyramid scheme - A central actor encourages a number of other actors to invest in something in return for something of little to no real world value in a fixed hierarchy on a promise of a) high profit margins on a cheap product and b) getting more new actors into the hierarchy directly underneath you feeding your personal revenue stream (and by design, those directly above you). This structure allows large profits to flow up the streams towards the tip of the hierarchy. A pyramid scheme by design is centralized and non-transparent in nature. People lower down are often not allowed to know exactly how far down they are in the pyramid, only seeing those they directly interact with.


        (CEO of MLM)
          /      |       \
       O       O       O
      / | \   / | \     / | \
   O  O  OO O O O  O O


Bitcoin - Every bitcoin is worth the same so every actor benefits proportionally with the growth of the network. Note that with a pyramid scheme the goods you purchase either have little utility like a poor quality 'how to' guide or a good whose market value is vastly lower than what you just paid to purchase it ($600 for 24 energy drinks). With bitcoin wealth is being traded 1:1. If you buy a bitcoin at a market price of $600, that is what it is worth at that moment and neither party can be said to have 'lost any wealth'. There is nothing stopping you from turning around and selling it right back to the market for market price, just like gold or an antique vase. Bitcoin has a flat hierarchy with no central authority and is transparent.


   O - O       O
    \    \       /
 O-O   O - O
     \   /      \
      O         O - O  

The scam Bitcoin is closest to in nature is a pump and dump, but what separates it from a penny stock P&D is transparency. Because the bitcoin landscape is transparent (open source software, the blockchain etc), it's utility is transparent. The pump of a penny stock is dependent on misinformation and opacity.

What confuses people is the exponential growth and the religious zeal of some bitcoiners giving the impression it is a get rich quick scheme.

[twiifm]

I've posted this before but ill post it here.

Ponzi scheme - A central actor (person or 'company') receives money with a promise of quick and significant returns. All people that buy into the scheme interact directly with the central actor who pays out money he has received from 'investors' as returns in order to drum up more investment in a fictitious investment opportunity. It is by design centralized, non-transparent and has a hierarchy of 2 levels - CEO of ponzi and everyone else. The investors do not realize they are being payed out with their own and others principle investments.

    O      O       O
     \      |      /
O - (CEO of ponzi) - O
    /       |      \
 O         O        O


Pyramid scheme - A central actor encourages a number of other actors to invest in something in return for something of little to no real world value in a fixed hierarchy on a promise of a) high profit margins on a cheap product and b) getting more new actors into the hierarchy directly underneath you feeding your personal revenue stream (and by design, those directly above you). This structure allows large profits to flow up the streams towards the tip of the hierarchy. A pyramid scheme by design is centralized and non-transparent in nature. People lower down are often not allowed to know exactly how far down they are in the pyramid, only seeing those they directly interact with.


        (CEO of MLM)
          /      |       \
       O       O       O
      / | \   / | \     / | \
   O  O  OO O O O  O O


Bitcoin - Every bitcoin is worth the same so every actor benefits proportionally with the growth of the network. Note that with a pyramid scheme the goods you purchase either have little utility like a poor quality 'how to' guide or a good whose market value is vastly lower than what you just paid to purchase it ($600 for 24 energy drinks). With bitcoin wealth is being traded 1:1. If you buy a bitcoin at a market price of $600, that is what it is worth at that moment and neither party can be said to have 'lost any wealth'. There is nothing stopping you from turning around and selling it right back to the market for market price, just like gold or an antique vase. Bitcoin has a flat hierarchy with no central authority and is transparent.


   O - O       O
    \    \       /
 O-O   O - O
     \   /      \
      O         O - O  

The scam Bitcoin is closest to in nature is a pump and dump, but what separates it from a penny stock P&D is transparency. Because the bitcoin landscape is transparent (open source software, the blockchain etc), it's utility is transparent. The pump of a penny stock is dependent on misinformation and opacity.

What confuses people is the exponential growth and the religious zeal of some bitcoiners giving the impression it is a get rich quick scheme.

This is good stuff.  I have to disagree with the point about transparency.  Yes the blockchain is transparent but so are the 10-Ks of penny stocks.

The reason why BTC looks like a penny stock pump & dump because the early buyers are pumping the stock so they can unload their shares.  The similarity to a penny stock pump & dump is that the marketing doesn't show risk/reward analysis only reward.  Penny stock pumpers usually say things like "no way this goes lower", "it's only 25c per share, will go to $10", "to da moon", etc...

[Alonzo Ewing]

Great post Solomon.

[jparsley]

The smart ones would be buying now

[RUEHL]

The tech can be duplicated and enhanced in an infinite number of ways now.  At this point, there is nothing unique about Bitcoin other than it was first.

That's similar argument to Google or Facebook stock.  The technology to search or do social media has been duplicated 1000 fold yet these two companies seem to retain leadership in their niche.  Why?  Because it's an adopted standard.  Nobody wants to switch email to some new startup Search engine that supposed to find things better than Google.  Nobody wants to be on a better social media that is 10x better and feature rich than Facebook, because all their friends and family are on Facebook.  Vendors don't want to accept non-Bitcoin cyrptocurrencies because crypto ATMs, mainstream businesses, and underground markets have accepted no other cryptos as a standard currency.

[Bit_Happy]

Fact: Satoshi is (probably) mega-rich.
Question: Are we going to let him get away with his "crimes".

[semaforo]

https://bitcointalk.org/index.php?topic=553510.msg6072478#msg6072478

  I also mentioned transparency as the essential quality that makes bitcoin not a ponzi.

  Reading this thread has got me thinking about pyramid scheme too. While bitcoin has the quality of a pyramid scheme in that it rewards the first people who get into it more than the later people, it also offers fundamental utility in the form of the most profound financial innovation that has taken place in years, maybe even centuries.

    This is a pretty big difference- it basically means that bitcoin has all the strengths of the pyramid scheme, plus a ton more. The difference between a pure pump and dump penny stock and a penny stock of a company that actually has an incredible new technology that they need to get funded is also a big difference.


   

[themusicgod1]

Of course it is one.  Likewise, human beings are animals, and lotuses are plants.  Just so happens that this one has a bunch of other characteristics that make it exceptionally useful for other things, like replacing the even-more-parasitic banking system.  Faced with a choice between partaking in a ponzi system and a future of humanity looking like a bank-purchased boot stamping on humanity's face forever, I'll choose the former.

[johnyj]

OP should stop measuring the value using fiat money (since it is created out of nothing, it should worth nothing), bitcoin's value measured by fiat money is meaningless. Fiat money is the biggest Ponzi scheme, but since everyone is in this scheme, it works well: You can always dump worthless fiat money to the next guy and he will accept them happily, because he can dump them anytime to the next guy

Another thing: It seems that the shoes you bought with fiat money kept their price relatively stable, but this is because both shoes and fiat money are losing value quickly together (due to more and more production of both of them)

[snoodles]

Pump and Dump - yes
Ponzi - impossible by design

yeah I guess if you want to get technical with the definition, it is more of a pump and dump. Although it has a lot of similarities to a Ponzi Scheme.

So already in your second post you've conceded that the premise of your thread is flawed and your thread is completely useless. If you had any self-respect you would delete it.

[hdbuck]

Another thing: It seems that the shoes you bought with fiat money kept their price relatively stable, but this is because both shoes and fiat money are losing value quickly together (due to more and more production of both of them)

yup it's magic..

[semaforo]

   I guess civilization could be considered a ponzi scheme- Rome had to keep expanding to maintain its structure, and after it couldn't expand anymore due to internal factors it kind of fell apart.

[Bit_Happy]

The more you try to deny it, the more BTC looks like a Ponzi.  
// Just kidding

Here is a long, detailed rebuttal to the Ponzi claims:
John Bush of SovereignBTC Refutes Mike Adams Bitcoin Hit Piece

As bitcoin exchange MtGox collapses, man who predicted the crash implores bitcoin holders to stop being suckered into a digital Ponzi scheme...
http://www.sovereignbtc.com/john-bush-of-sovereignbtc-refutes-mike-adams-bitcoin-hit-piece



A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.